What is Initial and Maintenance margin?

Initial margin and maintenance margin are designed to protect you against adverse market conditions, by creating a buffer between your trading capacity and margin close-out level.

1. Initial margin: a pre-trade margin check on order placement, i.e. on opening a new position there must be sufficient margin collateral available on account to meet the initial margin requirement for the entire margin portfolio.
2. Maintenance margin: a continuous margin check, i.e. the minimum amount of cash or approved margin collateral that must be maintained on account to hold an open position(s). Maintenance margin is used to calculate the margin utilisation, and a close-out will occur as soon as you do not meet the maintenance margin requirement.

(For an introduction to this feature, also watch Understanding initial and maintenance margin).

How will initial and maintenance margin appear in the platform?

You can see the initial and maintenance margin available to open a new position(s), and the initial and maintenance margin reserved to maintain an existing open position(s), in various places within the platform. The Trade Ticket module displays the following information:

• Initial margin available: margin available to open new positions
• Initial margin impact: initial margin requirement to open the new position
• Maintenance margin impact: maintenance margin requirement to maintain the open position

The Account Summary module displays the following information:

• Initial margin reserved: aggregate initial margin requirement for all open positions in the account
• Initial margin available: margin available to open new positions
• Maintenance margin reserved: aggregate maintenance margin requirement for all open positions in the account
• Maintenance margin available: margin available for maintaining open positions, before close-out occurs at 100% maintenance margin utilisation

How will initial margin prevent trading up to 100% margin utilisation?

When you place a new order, existing open positions and orders are included in the calculation of the initial margin requirement.

Initial margin requirement = New order initial margin + Sum (initial margin orders) + Sum (initial margin portfolio)

Trading example:

You deposit USD 10,000 in your account. You decide to buy 100,000 USDJPY. You hold no other open position(s). 

Any further attempt to buy will be rejected since the initial margin available has been utilised.

How is maintenance margin utilisation calculated?

Maintenance margin utilisation is the percentage of margin collateral utilised for trading leveraged products. It is calculated as follows.

Maintenance margin utilisation = (100 x Maintenance margin reserved) / (Account value + Other collateral – Not available as margin collateral)

What is the 100% margin close-out level?

Automatic margin close-out will occur at 100% (maintenance) margin utilisation.

For example:

You deposit EUR 10,000 in your account. You decide to buy 100,000 EURUSD. You hold no other open position(s). The initial and maintenance margin requirement on EURUSD as a major currency pair, is 3.30% and 1.70%.

Initial margin requirement = 100,000 x 3.30% = EUR 3300

Maintenance margin requirement = 100,000 x 1.70% = EUR 1,700

Margin utilisation (at the time of the sell  trade) = 17.0% (EUR 1700/EUR 10,000)

Later due to market movements there is an unrealised loss on your account of EUR 8300.

Margin utilisation = 100.0% (EUR 1,700/ (EUR 10,000 – EUR 8300))

As a result, your margin is fully utilised and therefore you have no capacity to enter into further transactions (except to close out your open position(s)). You will be in breach of margin requirements and, to comply with the margin close-out rule, we shall seek to immediately terminate, cancel and close-out all or part of any outstanding position(s), as well as cancel any open orders.